Answer :
Consider the scenario when the Fed announces a 0.75 percentage point or 75 basis points reduction in its target interest rate. By purchasing public bonds, the Fed will employ open market operations to boost the money supply. Hence, the given statement is true.
When the Fed purchases bonds from the general public, the amount of reserves in the banking system rises, increasing banks' capacity to extend credit.
In macroeconomics, the term "money supply" refers to the total amount of currency that the general public is holding at any given time. There are many ways to define "money," but the two most common metrics are demand deposits and currency in circulation.
The quantity of money in a nation is controlled by its central bank. A central bank can behave in a way that is consistent with an expansionary or contractionary policy by using monetary policy.
Therefore, the given statement is true.
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The complete question has been attached in text form:
Suppose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage point. To do this, the fed will use open market operations to increase the supply of money by buying bonds from the public. t or f
